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More than 3 million health insurance policyholders and thousands of employers will share $1.3 billion in rebates this year, thanks to health care reforms, a nonpartisan research group said Thursday.

The rebates should average $127 for the people who get them, and Democrats are hoping they'll send an election-year message that President Obama's much-criticized health care overhaul is starting to pay dividends for consumers. Critics of the law call that wishful thinking.

The law requires insurance companies to spend at least 80 percent of the premiums they collect on medical care and quality improvement or return the difference to consumers and employers. Although many large employer plans already meet that standard, it's the first time the government has imposed such a requirement on the entire health insurance industry.

"This is one of the most tangible benefits of the health reform law that consumers will have seen to date," said Larry Levitt, an expert on private insurance with the Kaiser Family Foundation, which analyzed industry filings with state health insurance commissioners to produce its report. Kaiser is a nonpartisan information clearinghouse on the nation's health care system.

Still, health insurance is expensive, and $127 may not even pay a month's worth of premiums for single coverage.

And the insurance industry says consumers should take little comfort from the rebates because premiums are likely to go up overall as a result of new benefits and other requirements of the law.

"The net of all the requirements will be an increase in costs for consumers," said Robert Zirkelbach, spokesman for America's Health Insurance Plans, the main industry trade group.

"Given that health care costs are inherently unpredictable, it's not surprising that some plans will be paying rebates to policyholders in certain markets," Zirkelbach added.

But the Kaiser report said the rebate requirement may be acting as a brake on the industry, discouraging insurers from seeking big premium increases to avoid having to issue refunds later and face possible criticism.

The new law has "provided an incentive for insurers to seek lower premium increases than they would have otherwise," the report said. "This 'sentinel' effect on premiums has likely produced more savings for consumers and employers than the rebates themselves."

The study found the largest rebates will go to consumers and employers in Texas ($186 million) and Florida ($149 million), where Govs. Rick Perry and Rick Scott have been among the staunchest opponents of the federal law. Both states applied for waivers from the 80 percent requirement and were turned down. Hawaii is the only state in which insurers are not expected to issue a rebate.

Here's how the rebates break down nationally:

More than 3 million individual policyholders will reap rebates of $426 million, averaging $127 apiece. These are consumers who are not covered through an employer and buy their policy directly. Consumers in Texas, Oklahoma, South Carolina and Arizona are most likely to be eligible.

Insurance companies must notify policyholders, and the rebates are due by Aug. 1. Some companies have already begun to pay.

In the small-employer market, plans covering nearly 5 million people will receive rebates totaling $377 million.

Employers do not have to pass their rebates on to workers, and can also take them as a discount on next year's premiums.

Insurers serving large employers face a stiffer requirement. Under the law, they must spend 85 percent of premiums on medical costs. The study found that 125 plans covering 7.5 million people at large employers will give back a total of $541 million.

Most plans operated by major national employers are exempt from the requirement. The biggest companies usually set aside money to cover most of their workers' medical expenses. Typically they hire an insurer to administer their plan, but they do not buy full coverage from the insurer.

Supporters of the requirement say it will keep insurers from padding their profits at the expense of unsuspecting consumers.

"Millions are benefiting because health insurance companies are spending less money on executive salaries and administrative costs and more on patient care," said Sen. Jay Rockefeller, D-W.Va., a leading advocate of the rebate provision.

White House spokesman Jay Carney said the report shows how Obama's law is "already strengthening the health care system for millions of Americans."

Like everything else about the overhaul, the future of the rebates depends on whether the Supreme Court upholds the law in a decision expected by early summer.

Seventeen states applied for waivers from the 80 percent standard, producing evidence that it would destabilize their private health insurance markets. Federal regulators granted adjustments to seven states, usually meeting each state's request part way.

Data from the nation's most populous state, California, were not ready and thus were not included. Final statistics on the rebates will be issued by the federal government in early summer.

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